Europe

Greece's new govt wins confidence vote

(Agencies)
Updated: 2011-06-22 09:43

Greece's Prime Minister George Papandreou addresses parliamentarians during a session in Athens June 21, 2011. Papandreou's cabinet is expected to survive a confidence vote late on Tuesday but must rapidly pass two more tests to avert the euro zone's first sovereign default.[Photo/Agemcies]

ATHENS -- Greece's new government won the confidence vote of the parliament early Wednesday morning in a crucial test on the course to tackle the country's debt crisis which has brought it to the brink of default, alarming Europe and the world.

Following a three-day debate the new cabinet formed by Greek Prime Minister George Papandreou last week to ease the pressure from protesters on the streets and party members over austerity measures, won the roll call vote on straight party line, 155 to 143 in the 300-member strong parliament.

A total of 298 deputies participated in the vote, with two absent.

A defeat would most probably lead to snap general elections which the Greek leader and analysts regard as "destructive" at this period, as the country struggles to escape an economic meltdown.

Despite the negative votes of the opposition parties, relying on the support of the deputies of the socialist PASOK party the cabinet will now push through austerity and reform policies requested by EU/International Monetary Fund creditors in exchange of the release of further vital aid to debt-ridden Greece next month.

Without it the country faces the danger of default for a second time in a year.

The next major test for the government is the parliamentary vote on June 28 over the next wave of 28 billion euro worth ($40.32 billion) budget cuts, tax hikes and a 50 billion euro (S72 billion) privatization programs included in the Medium-Term Fiscal Strategy plan which will run to 2015.

Addressing the parliament earlier on Tuesday evening the newly- sworn in Deputy Prime Minister and Finance Minister Evangelos Venizelos expressed confidence that the measures package will be ratified so that Greece will receive on time the next tranche of a multibillion-euro aid bailout pact to avoid a default in July.

Moreover, the approval of the mid-term strategy plan will pave the way for EU/IMF lenders to grant Greece a similar second support package to stave off a credit event which could trigger a domino effect across the eurozone -- even though it has missed some fiscal targets since last year.  

Greece's Prime Minister George Papandreou (R) shakes hands with Finance Minister Evangelos Venizelos after winning a vote of confidence in Athens June 21, 2011.[Photo/Agencies]

This second package envisages the participation of private investors, who will be asked to voluntary roll over at mature Greek bonds.

Venizelos said consensus to overcome the debt crisis that has threatened Greece with default is wider than thought abroad.

Addressing the Greek parliament for first time as Finance Minister Venizelos sent a message to European partners and the International Monetary Fund who request national consensus and the ratification of a fresh austerity package by the end of June before releasing further aid to the country.

"They do not trust us that we will implement the necessary changes to lead Greece back to growth on our own without pressure," he said, reassuring that there are no severe disagreements amidst Greek political parties and protesters "over the main target to save the country, but only regarding the policy mix".

Noting that Greece has faced major challenges in the past and has proved critics wrong recently when hosted successfully the Athens 2004 Olympic Games, Venizelos stressed that Greeks can win the current "war" and overcome the crisis with confidence, solidarity and unity.

In a reference to thousands of Greek citizens who protested the belt-tightening measures outside the parliament building at the same time, he stressed that the government feels their agony and will speed up efforts to fight tax evasion, boost development and ease the pain from austerity.

Venizelos is due to hold talks on Wednesday with a delegation of EU/IMF auditors in Athens over the next steps that should be taken to fully meet targets, drastically reduce the budget deficit and exit the crisis by 2014.

Beyond tough negotiations with foreign creditors, eventually the Greek government has to win the minimum support of opposition parties, labor unions and the average Greek citizen to the strategy as well to secure the success of the program, local commentators stressed.

They pointed to the thousands of demonstrators who held a massive peaceful rally outside the parliament building on Tuesday evening, denouncing the measures, and the latest opinion polls released a few hours earlier in Greek media that showed that main opposition conservative New Democracy (ND) party leads PASOK for the first time since the 2009 general elections due to the harsh austerity drive.

According to the survey conducted for Mega television channel the ruling party would lose by 20 to 21 percent to the ND if elections were held today.

The majority of respondents (58.8 percent) does not expect a positive result from the cabinet reshuffle, even though they express more confidence to Venizelos than his predecessor George Papaconstantinou.

A 66.3 percent of Greeks, according to the poll, rejects the mid-term program.

According to the survey conducted for Real FM radio channel the ND has a lead over PASOK by 21.3 percent to 19.6 percent, while a 43 percent of respondents prefer elections to a new cabinet which will promote the same policies.